Dunkin' on U.S Expansion Spree - Analyst Blog
October 19 2012 - 8:15AM
Zacks
Dunkin’ Donuts, an operational arm
of Dunkin Brands Group, Inc.
(DNKN), recently penned a multi-unit
store development deal with one of its existing franchisees -
Sizzling Donuts, LLC. As per the deal, Dunkin’ will unveil 16 new
restaurants in Utah in the coming years. The restaurants are due to
be opened in Salt Lake City, with the first restaurant slated to
open in 2013 and the rest by 2018.
As a point of reference, the move is part of the company’s goal to
double its presence in the U.S. over the next 20 years. Dunkin’ is
focused on a strategy to seize growth opportunities over its
competitors by catering to the consumer needs of individual
markets. The company is currently expanding through single and
multi-unit opportunities.
The promising restaurant industry in Utah continues to drive the
U.S. economy. In 2012, total revenue from the restaurant sector in
Utah is projected to be around $3.3 billion. Salt Lake City, the
capital and most populous city in Utah, is known for its varied
shopping destinations. The peer companies of Dunkin Brands
such as The Cheesecake Factory Incorporated
(CAKE) and Starbucks Corp.
(SBUX) have been active in the city for
years.
Sizzling Donuts, LLC is a subsidiary of Sizzling Platter, LLC,
which also franchises one of Dunkin’s major peers - Red
Robin Gourmet Burgers, Inc. (RRGB). The
company first joined hands with Sizzling Donuts, LLC earlier in
2012 to open 11 new restaurants in Denver, Colorado, and eight in
El Paso, Texas, in the coming years. Management believes that
franchise opportunities still exist in the Utah market,
particularly in the cities of Northern Utah and Nevada.
Earlier this month, Dunkin’ inked multi-unit store development deal
with new franchisees Dean Kreher and Ted Pierce for three
restaurants in St. Louis, Missouri by 2015. Last month, Dunkin’
also joined hands with a franchise group to open two units in Ohio
and inked a deal with two other franchise groups to open three
units in Illinois. In addition, the company entered into multi-unit
store development agreements with several franchise groups for 29
new units in Houston and Waco in Texas.
In order to be competitive and innovative, Dunkin’ offers services
through various types of real estate formats including
free-standing restaurants, end caps, in-line sites, gas and
convenience, travel plazas, on-university campus and others.
Recently, Dunkin’ opened its outlets at 10 college campuses across
the Northeast, Mid-Atlantic and Southern United States.
Dunkin' is the market leader in the coffee, donut, bagel and muffin
categories. The company operates more than 10,000 restaurants
worldwide, including more than 7,000 restaurants in 36 states as
well as the District of Columbia, and in more than 3,000
international locations in 33 countries.
Dunkin Brands is expected to release its third-quarter 2012 results
on October 25. The Zacks Consensus Estimate for the third quarter
is currently pegged at 35 cents per share.
We currently have a long-term Neutral recommendation on the stock.
Also, it carries a short-term Zacks #3 Rank (Hold).
CHEESECAKE FACT (CAKE): Free Stock Analysis Report
DUNKIN BRANDS (DNKN): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
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